Analysis: FDR on Social Security

Date: January 17, 1935 and August 14, 1935

Author: Franklin Delano Roosevelt

Genre: address; speech

Summary Overview

As President Franklin Roosevelt entered the third year of his presidency, he and his advisors faced an economy still in the midst of the deepest recession of the twentieth century, the Great Depression. Compounding this were unusually dry conditions, the Dust Bowl, which destroyed many Midwestern farms, adding many thousands more to those in poverty. The mixture of urban and rural unemployment created a situation in which many older individuals no longer had the ability to support themselves, and their families did not have the resources to assist them. The proposed national Social Security system, which would pay retirement benefits based upon contributions made while working, would be a major step toward ending poverty among senior citizens. This revolutionized the concept of retirement in America. In addition, Roosevelt proposed a standardized unemployment compensation system to be administered by the states, as well as grants to states for the assistance of children in need. Although this assistance was targeted at just these three areas, the overall social and political impact of the legislation proposed by Roosevelt, and passed by Congress, cannot be overstated.

Defining Moment

Although an economic slump had begun during the summer of 1929, the stock market crash of October 1929 focused everyone's attention on the economy and destroyed the optimistic outlook that had prevailed during most of the 1920s. President Hoover incorrectly believed that this would be a short-lived downturn. With rising unemployment and a slumping economy, Hoover lost the 1932 presidential election to Franklin Roosevelt, who campaigned on a promise that he would give a New Deal to Americans. The 25 percent unemployment rate was a major focus of Roosevelt's early legislative efforts. His programs, as well as a slowly recovering economy, caused a major reduction in unemployment. However, one significant demographic sector remained in serious trouble. The poverty rate for older Americans was about 50 percent. Between urban economic problems in the manufacturing sector and poor agricultural prospects because of the Dust Bowl, it was unlikely that older people could re-enter the labor market. The stock market and financial crisis of the past few years had wiped out the savings of many. In Roosevelt's view, a program to raise older Americans out of poverty, at that time and in the future, was needed.

He proposed the creation of the Social Security program, initially funded by the government, with future beneficiaries' benefits paid by their own contributions. This was to be a radically new program for the United States, changing the old pattern of individual or family support for those who were no longer able to work. Having been elected in 1932, and with the Democratic Party also getting a large majority in both houses of Congress in both the 1932 and 1934 elections, Roosevelt could get virtually all of his legislation passed without significant problems. This included the Social Security program. The system, along with funding for those who were already at retirement age, was authorized and signed into law in August 1935. While slightly increasing the national debt to meet the needs of the first recipients, the program, in its initial years, dramatically reduced the number of older Americans living in poverty. The unemployment compensation program that was part of the legislation also helped insure that workers losing a job would have a minimum level of support, as would children in need. While passage of the law was part of Roosevelt's plan to stimulate the economy, he and the program's backers hoped that old-age security and unemployment benefits would help keep such depressions from recurring in the future.

Normally, it is only under unusual circumstances that landmark legislation like the Social Security Act can pass into law and be accepted. The year 1935 allowed for such momentous legislation because of the single-party majority and the will of political leaders to address not only current problems, but likely future problems as well.

Author Biography

Franklin Delano Roosevelt (1882–1945) from Hyde Park, New York, was the thirty-second president of the United States. He married Anna Eleanor Roosevelt in 1905, and they had six children. Franklin began his political career in 1910 as a New York state senator, later serving as assistant secretary of the Navy and governor of New York prior to his being elected president in 1932. The early 1920s brought two low points in his life: being the losing vice presidential candidate in 1920 and being stricken by polio in 1921. He was the first person with a major disability to be elected president. (He never regained full use of his legs.) His economic policies, as governor, were the foundation for his presidential campaign. Roosevelt transformed the nation through his aggressive agenda to restore the economy. In addition to the Social Security and unemployment programs, Roosevelt transformed the laws regulating the banking system, stock trading, farm price supports, and the mortgage process and devised a temporary means to employ idle workers through the Civilian Conservation Corp (CCC) and Works Progress Administration (WPA). He supported the nations fighting Germany in World War II and, once the United States entered the war in 1941, was very active in overseeing military operations.

Document Analysis

The legislation proposed by Franklin D. Roosevelt was one of the most important pieces of legislation in the modern history of American government. Since its inception in 1935, the Social Security system has affected virtually every American citizen. While not touching as many lives directly as Social Security, the strengthening of the system for unemployment compensation and federal aid to children in difficult circumstances have also been important down through the decades. Together, these provisions served to create a safety net upon which many people have depended on in the past and continue to depend on today.

In June of 1934, Roosevelt began the process of developing what would become the Social Security system when he announced the appointment of five cabinet members to be the Committee on Economic Security, charged with developing plans for the system. With wide-ranging input, including a study of the world's first public pension system in Germany, the Committee drew up a proposal that Roosevelt then forwarded to Congress with the first message reproduced here (Jan. 17). As stated in his third paragraph, Roosevelt pressed for prompt passage.

Although resistance to federal deficit spending was not as strong in 1935 as it has been in some eras, a substantial deficit had been created during the first years of the Great Depression owing, in part, to the implementation of programs designed to stimulate the economy. Thus, Roosevelt emphasized that this new retirement program would be self-supporting. The principal regarding self-support limited what could be accomplished because Roosevelt did not want to have future government actions “jeopardized by extravagant action” in the present. Thus, the new “old-age benefits” would be funded by “compulsory” contributions by workers (in the form of paycheck withholdings). In the minds of those who developed the basic plan, this was a key provision for public acceptance of the program and long-term stability.

However, in order to meet the needs of poverty-stricken older Americans in 1935, a second program had to be included in the proposal. This was the “non-contributory old-age pensions” given to those already sixty-five or older. The legislation established a temporary state-administered program, with money given to the states by the federal government for the welfare of senior citizens. This money is included in the “one hundred million dollars” mentioned in the speech. Most of the money not needed for old-age benefits was slated for “children's aid” and health initiatives. The unemployment compensation plan, like Social Security, was an insurance-style program with a “payroll tax” collected to fund much of its cost. Although it would not help individuals who had previously lost their jobs, a system for assisting those who became unemployed in the future was seen as a major step toward reducing “the dangers of future depressions.”

The second statement here (Aug. 14), written seven months after the first, was made when Roosevelt signed the bill into law. This brief statement encompasses Roosevelt's hopes that this legislation might assist the “average citizen” to cope with unfortunate circumstances in the future. As he recognized, the law did not achieve everything that might have been desired, but it did create a strong economic foundation on which people could and have relied.

Bibliography and Additional Reading

“Biography of Franklin D. Roosevelt.” Franklin D. Roosevelt Presidential Library and Museum. National Archives and Records Administration, n.d. Web. 18 August 2014.

Brinkley, Alan. Franklin Delano Roosevelt. Oxford: Oxford University Press, 2009. Print.

DeWitt, Larry, Daniel Beland, & Edward D. Berkowitz. Social Security: a Documentary History. Washington, DC: CQ Press, 2007. Print.

“FDR's Greatest Hits.” Franklin D. Roosevelt Presidential Library and Museum. National Archives and Records Administration, n.d. Web. 18 August 2014.

Freidel, Frank, & Hugh Sidey. “The Presidents of the United States of America: Franklin D. Roosevelt,” The Whitehouse: The Presidents. The White House Historical Association, 2006. Web. 18 August 2014.